Forex Technical Update
The USD/CAD has regained bullish momentum in the short-term as the 1H chart shows the RSI kiss 70 as the market pushed above the 200 hour simple moving average. It should be noted that this bull swing is in the context of a range bound market, reflected by the flatness of the 200H SMA , and the fact that the RSI has kissed 30 before kissing 70. But now, the RSI holds above 40, and if it can break above 60, price action is likely in a bullish continuation at least in the short-term. Looking at the price action, we see that the market has been respecting a very short-term declining trendline, and breaking above that would be a first clue for this bullish continuation scenario.
This bullish scenario is not very good to trade on because it is coming from the middle of a range we see int he 4H chart (near parity). In a range, the idea is to trade at the support or resistance toward the middle or central pivot. Plus the USD/CAD has been bearish in the medium term so a bullish outlook is not only going away from the middle of the range but also against the medium trend.
While the very short-term outlook remains bullish toward 1.0070, a better trade idea might be to short it from around there back toward 1.00. Dealing with short-term swings within a relatively small range (below 200 pips here) can be tricky, so a wait for breakout and clues for new direction might be prudent. An immediate clue for bearish outlook is this failed bullish continuation attempt holding below parity, and falling below 0.9950. To the upside, we'll have to break a declining trendline near 1.0100 and stay above the 1.0070 pivot.
Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes and IBTrade will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.